Pdvsa's debt instruments about to hit historical high

Foreign investment funds are speculating about a likely political change in Venezuela and have increased the purchase of Venezuelan bonds, thus fueling the price of the South American country's debt instruments.

Investors believe that the bonds they are purchasing will be worth much more if a new administration replaces Hugo Chávez's government following the presidential election to be held in October 2012. President Chávez has cancer and has drastically reduced his public appearances in the past two weeks.

The price of Venezuelan bonds that are traded abroad, both Pdvsa and government papers, has risen two percentage points despite pessimism in the market in view of the possibility that the euro zone crisis can be worsened by the Spanish recession.

Pdvsa's bonds due in 2022 are currently traded at 103%, near its historic high (104%) whereas the Global 22 is trading at 107.5%.

With reporting by Víctor Salmerón